Catalan nationalists discuss the final points to reach a stable parliamentary agreement

Barcelona (ACN).- Holding the self-determination referendum before 2015 and certain aspects regarding the fiscal policy are the final obstacles to reaching a definitive stable parliamentary agreement between the Centre-Right Catalan Nationalist Coalition (CiU) – which won the elections but lost support – and the Left-Wing Catalan Independence Party (ERC) – which is now the second largest party, having doubled its MPs. After two and a half weeks of complex negotiations, the ERC announced on Friday evening that it will vote in the Catalan Parliament for the CiU leader and Acting President of the Catalan Government, Artur Mas, to be re-elected. The ERC is willing to offer stable parliamentary support throughout the entire legislative term to pass the main laws, but the pro-independence party is refusing to sit in the Cabinet, which will be only run by the CiU (as it has been over the last two years). However, the ERC does not seem to be in a hurry to close the deal and its full support for the entire term has not been granted yet, despite the long meeting between the leaders of both parties on Friday evening, with Artur Mas for the CiU and Oriol Junqueras for the ERC. A high-level of expectation was put on that meeting as it was thought to be definitive, but at 22h Junqueras left the Catalan Government’s Palace without having reached a final agreement. The ERC is insisting that the CiU have to commit to organising Catalonia’s self-determination referendum in 2014 and the Centre-Right coalition refuses to set a specific date as it prefers to have some flexibility. In addition, Mas stated on Saturday morning that without a stable agreement, being able to organise the referendum is less likely. Furthermore, Mas has again committed to organising the self-determination vote within this term in front of his party’s Saturday meeting. However, the most conservative side of the CiU, led by the Christian-Democrat Josep Antoni Duran i Lleida, is not keen to rush things with the Catalan independence issue and is also reluctant to allow certain ERC proposals regarding taxation. They particularly fear that increasing the fiscal pressure, particularly among the wealthiest, could cause a “Depardieu effect”, resulting in private fortunes leaving Catalonia and slowing down private investment.

Throughout Friday afternoon and evening, it seemed that a definitive agreement between the CiU and ERC was about to be reached and announced that same night or on Saturday, after both parties’ National Council meetings. The CiU has agreed to most of the ERC’s proposals to increase revenue and wealth redistribution, in order to reduce the deficit but with a reduction in the adjustment’s hard effects on the weakest people. In fact the economic part of the agreement is almost closed although some specific details regarding certain taxes and fees are yet to be agreed on. The main obstacle was ERC’s insistence on reaching the explicit commitment to organise the self-determination vote before the end of 2014.

Agreement to develop the referendum legal framework in 2013

Both parties have already agreed to work in 2013 on developing the legal framework to be ready to celebrate the referendum after 2013. However, Artur Mas and Duran i Lleida (the CiU’s ‘number two’) do not want to publicly commit on a date. This autumn, Mas stated that he would only call for a self-determination referendum when he was sure the independence option will win. Probably, following November’s electoral reasons, this conviction is even firmer. The ERC President, Oriol Junqueras, said on Friday night, after he left the meeting with Mas and via his personal Twitter account, that the date and how to celebrate the vote were the crucial aspects in order to reach the agreement. However, the ERC confirmed on Friday evening that they would support Mas to be re-elected President in the Catalan Parliament’s vote, which will be held on Monday the 24^th of December the soonest. Junqueras stated they are not in a rush to reach a definitive agreement but the CiU apparently is, in order to close the deal before the parliament’s re-election vote so that they know the full road-map from day one. In fact, because of this, Mas stated this Saturday that the re-election vote could be delayed until early January in order to have time for closing the agreement with the ERC.

A severe budget adjustment in 2013 in order to meet a 0.7% deficit target

In 2013, the budget of the Catalan Government will have to make a tremendous adjustment in order to meet the 0.7% deficit target imposed by the Spanish Government. The adjustment is particularly complicated as the largest part of the Catalan Executive’s budget goes to fund basic Welfare State policies, such healthcare, education and social policies, which take up to 70% of the public spending. On top of this, the Catalan Government also has to fund police, prisons, justice administration, local public transportation, water management, housing, culture, agricultural policies, etc.

The economic part of the agreement is almost closed

As aforementioned, the economic part of the agreement has almost been reached, although some specific points are still to be fixed, despite Friday’s meeting between Mas and Junqueras. The CiU has agreed to put the Inheritance Tax in place again, which was eliminated two years ago as one of the first measures by the Centre-Right Coalition when they took office in late 2010. In addition, it seems the tax would affect more people now than it did before its elimination, as the taxation levels would be reduced. However, the CiU wanted to consider this tax as “temporary” and the ERC refuses to commit to this. Another tax that is still being negotiated is the one it would affect bank deposits. The CiU completely opposes it and the ERC is willing to find other ways to create taxation formulas affecting the banks. A hypothetical agreement on this issue would be creating a tax on the banks that offer fewer loans to companies and families. Lastly, another point where discussion is also ongoing is the drug prescription fee. The CiU adopted it this year and the ERC opposed it. Now the ERC has accepted its continuation but it wants to make it more gradual and more related to levels of wealth, a condition that the CiU accepts but whose specific details have not been set yet.

Other fees and taxes that will be created or reformed are, firstly, the Tax on Wealth, which will have its taxation levels reduced in order to affect more people and increase the generated revenue for public finances. Furthermore, the tax regarding large shopping centres will be increased, in order to make the multinational companies running these malls contribute to a larger extent to public finances in times of crisis. In addition, there are also some innovative taxes, such as the one on empty flats and houses, in order to put more housing units on the rental market and, by increasing the number on offer, reducing the prices and making housing more accessible. Additionally, a tax on sugar beverages would be set to reduce their consumption for health reasons.

Another group of taxes are related to environmental reasons. A tax on plastic packaging will be created. In addition, there will be a new tax on nuclear energy. Lastly, a fee for heavy road transportation vehicles travelling on Catalan Government highways (a sort of fee the European Commission wants to implement throughout the EU in coming years) will be in place within the next year.